Today's FX Comment

November 24, 2023?

Good morning and TGIF. Black Friday today, but stop that online shopping for at least a little while, the market is open for FX business today! Black Friday signals something besides shopping in my household. Black Friday means that tomorrow is Christmas decorating Saturday and I turn into my once per year Clark Griswold from National Lampoon’s Christmas Vacation and string up all the lights outside. If you are driving around North Toronto tomorrow please feel free to stop by and at least hold the ladder for me...

Yesterday was the actual US Thanksgiving holiday (and the Cowboys covered - yes!) but let's face it, the market feels like one extra long weekend today. Early close for stocks and bonds in the US today so no doubt it will be a very quiet Friday afternoon. Overnight, Asian indices were mixed. The Nikkei hit a four month high while indices in Hong Kong and China were in the red. It looks like the uptick in positive sentiment driven by recent reports of more support for the Chinese property sector is fading just a touch as we head into the weekend. Once again, the PBOC fixed the Yuan stronger at 7.1151. USDCNH continues to hover support at the 200day MA (7.1342). The pair hasn't been below the 200day since last May but it feels like it is just a matter of time before we test lower.

European equity markets are mostly higher this morning albeit on lighter volume. Stocks have been given a bit of a boost as German economic sentiment data continues to improve while the truce between Israel and Hamas seems to be holding which might be helping a little bit as well. Futures point to small gains on the open in North America despite an uptick in yields that has the US 10 year back at 4.47% this morning. Oil is pretty steady as OPEC+ hammers out a production deal with member nations from Africa while the US Dollar is lower across the board to start the session. All about black Friday today and all kinds of headlines about the health of the US consumer no doubt.

FX thoughts:

JPY - Core CPI came in a little bit lower than expected last night but is still running at 4% YoY and this marked the 19th straight month the print has been above target. I wonder when the BOJ will finally admit inflation may be stickier then the previously believed. I like selling rallies here and still like longer dated downside option structures. Support 147.50.

AUD - No real change here, the RBA is sounding more hawkish and I think more rate hikes are coming. We should find buyers on dips. Support .6525, resistance .6620.

EUR - German economic sentiment data fell just shy of expectations but nonetheless has improved three months in a row lending a bit more support to the idea that maybe the worst is in the past for the European economy. Of course Germany still has some budget issues to deal with. Resistance 1.1040, major support at 1.0800 with some at 1.0830 along the way.

GBP - The Pound is rallying once again this morning lifted by higher equities and by a more hawkish sounding BOE Chief Economist who noted that the recent weakening of activity is not as associated with easing of inflationary pressures while adding that services and wage growth remained at very elevated levels.? The 200day MA (1.2456) is support, nearby resistance 1.2590 followed by 1.2655.

CAD - The Canadian Dollar is a bit stronger today but remains near the bottom of the G10 pack once again hovering just above support at 1.3680. MTD: NZD +4.15%, NOK +4%, AUD +3.65%, CAD up a measly +1.4%. Definitely some catching up to do. Retail sales up shortly for the month of September, always seems stale to me but we'll have a flash estimate of October to look at as well. We'll see how big a dent those larger mortgage and rent payments are putting into discretionary spending. Resistance 1.3745.

Have a great weekend.

Good luck.